“Not So Fast!” District Court orders divestiture of assets in private Clayton Act case six years after DOJ clears deal

Increasingly, the antitrust agencies have been challenging unreported transactions post-closing under the Clayton Act, seeking an unwinding of the transactions or at least divestitures of some of the assets purchased. Until recently, however, the threat that a private plaintiff would obtain a court order requiring an unwinding or divestiture once the deal has closed has been more theoretical than real. The threat may now be more real than theoretical. In what is the first decision of its kind, a federal district court has ordered a defendant in a private action brought, in part, under Clayton Act Section 16 to divest assets approximately six years after they were purchased. In that case, the defendant, a door manufacturer and door component supplier, had acquired a competitor in 2012 in a transaction that was reviewed without a challenge by the Department of Justice (DOJ) Antitrust Division. Yet on October 5, the District Court for the Eastern District of Virginia ordered the defendant, in a case brought by a competitor/customer that had previously been awarded $175 million in damages, to sell key door component manufacturing assets that the defendant had acquired as part of the 2012 transaction. If allowed to stand, the decision could mean that, going forward, acquirers can be less confident about the finality of their acquisitions post-closure. Read more here.